Transcript Economic Ties Between Texas and Mexico

Economic Ties
Between Texas and Mexico
Luis Bernardo Torres Ruiz, Ph.D.
Research Economist
February 6, 2015
International Forum TAR
Contents
1. Economic Integration
2. Residential Impact
3. Concluding Remarks
Mexico is the largest export market for Texas
Texas Exports by Destination
(Billion $)
World
Mexico
Canada
Brazil
China
Netherlands
300
(%) of Total Exports Average 2000-2014Q3
— Mexico 37.8
— Canada 10.1
— China 3.7
— Netherlands 2.8
— Brazil 2.7
250
200
150
100
50
Source: Foreign Trade Division, U.S. Census Bureau
2014Q3
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Exporting manufactured goods to Mexico
Texas Exports to Mexico by Product
(Billion $)
30
120
334 Computer & Electronic Products
324 Petroleum & Coal Products
336 Transportation Equipment
25
100
325 Chemicals
335 Electrical Equipment; Appliances & Components
20
80
Manufacturing(right y-axis)
Source: Foreign Trade Division, U.S. Census Bureau
2014Q
3
2013
2012
2011
2010
2009
2008
2007
0
2006
0
2005
20
2004
5
2003
40
2002
10
2001
60
2000
15
Texas exporting manufactured goods directly and indirectly support
jobs in the state
Jobs Supported by Manufactured Exports by State
(Thousands)
Other 35 States
1647
New Jersey
143
Tennessee
148
North Carolina
148
Louisiana
161
Indiana
164
Pennsylvania
177
Georgia
183
Ohio
2013
242
Florida
260
Michigan
275
New York
299
Washington
304
Illinois
306
California
668
Texas
1,073
0
200
400
600
Source: International Trade Administration, U. Department of Commerce
800
1,000
1,200
1,400
1,600
1,800
Product Sharing: U.S. (Texas) and Mexican factories work together to
manufacture a good
Value of US Content in Imports from Selected Economies
Country
Mexico
Canada
Malaysia
Korea
China
Brazil
European Union
Japan
India
%
40
25
8
5
4
3
2
2
2
Source: Robert Koopman, William Powers, Zhi Wang and Shang-Jin Wei, “Give Credit Where Credit is Du:
Tracking Value Added in Global Production Chains, National Bureau of Economic Research, Working Paper
No.16426, March 2011, page 38.
Creating jobs in the Texas border cities when output increases in
Mexican maquiladora industry
10% increase in maquiladora output leads to an increase in
employment in the adjacent Texas city
City
El Paso
Laredo
Brownsville
McAllen
%
3.0
3.6
1.9
5.9
Source: J. Cañas, R. Coronado, R. Gilmer, E. Saucedo. “The Impact of Maquiladoras on U.S. Border
Cities”,Federal Reserve Bank of Dallas, working paper, 2011.
Flow of goods and services create jobs in services, like transportation and
warehousing
U.S.-Mexico Trade by Top 10 Land Ports in 2013
City Rank
1. Laredo, TX
2. El Paso, TX
3. Otay Mesa-San Ysidro, CA
4.Hidalgo, TX
5.Nogales, AZ
6.Eagle Pass, TX
7.Santa Teresa, NM
8.Bronsville-Cameron, TX
9. Calexico, CA
10.Del Rio, TX
11.Other
Total Trade
(Billions $)
Share of
Total(%)
168.8
66.9
34.8
26.8
23.5
21.7
19.9
15.4
7.3
4.1
2.9
43.1
17.1
8.9
6.9
6.0
5.5
5.1
4.0
1.9
1.1
0.7
Source: Texas Center for Border Economic and Enterprise Development, Texas A&M International
University
Mexican investment supports U.S. (Texas) jobs, with an annual
compensation to employees around $65,465*
Mexican Foreign Companies with Operations in Texas
Company
Axis Pipe and Tube, Inc. (Prolamsa)
Bimbo Bakeries USA Inc.(Grupo Bimbo)
Bio-PAPPEL International
Borden Milk Products LLC(Grupo Industrial Lala)
Cemex Cement(CEMEX)
Elamex USA Corp(ACCEL Group)
Metalsa Light Truck Inc.(Grupo Proeza)
Mission Foods Inc.(Gruma)
* Bureau of Economic Analysis
Source: Office of the Governor The State of Texas
City
Bryan
El Paso, Fort Worth, Rockwall
El Paso, Rio Grande City
Austin, Dallas
El Paso, Houston, New Braunfels, Odessa
El Paso
San Antonio
Irving, San Antonio
Contents
1.Economic Integration
2. Residential Impact
3. Concluding Remarks
Approximately 65 percent of buyers from Mexico purchased
properties in Texas
Mexican Home Purchases by State
(%)
70
65
60
50
40
30
18
5
5
4
20
10
4
Texas
California
Georgia
Illinois
Source: National Association of Realtors. 2014 Profile of International Home Buying Activity
South Carolina
Other States
Sales price of Mexican purchases are below all other categories, while
the peso/dollar exchange rate had a negative effect in 2014
Median Sales Price
($)
Average Sales Price
($)
2014
2013
Mexico
Mexico
International
International
Texas
Texas
U.S.
U.S.
0
50,000
100,000
150,000
200,000
250,000
300,000
Source: National Association of Realtors, 2014 Profile of International Home Buying
Activity and Real Estate Center at Texas A&M University
2014
0
100,000
200,000
300,000
400,000
Source: National Association of Realtors, 2014 Profile of International Home Buying
Activity and Real Estate Center at Texas A&M University
Of the markets of greatest interest for Mexican buyers, four are in
Texas: El Paso, Houston, Laredo and San Antonio
Type of Purchase
(%)
Financing by Mexican Purchase
(%)
Mortgage
54%
Vacation home/
Residential
Rental
33%
Commercial
rental
4%
Cash
46%
Primary
residence
63%
Source: National Association of Realtors. 2014 Profile of International Home Buying
Activity
s.a./ Seasonally adjusted.
Source: Real Estate Center at Texas A&M University.
Contents
1.Economic Integration
2. Residential Impact
3. Concluding Remarks
Concluding Remarks
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The Texas and Mexican economy are highly integrated
The state’s relationship with Mexico is of complementary, not
economic rivals
Texas and Mexico trade occurs in the context of production
sharing (vertical integration)
Texas border is especially integrated with Mexico
In addition to trade, Mexicans have significant important foreign
investment in Texas
Mexican economic growth has a positive impact for the Texas
economy
Possible further long-run integration can be boosted by the
recent energy reform in Mexico and immigration reform (aging
labor force in the U.S.)
www.recenter.tamu.edu